David Stern delivers annual address

LOS ANGELES -- As the NBA's owners and players struggle to move toward a new collective bargaining agreement, commissioner David Stern said Saturday there are striking similarities between the differences that separate the sides now and the ones that led to the 1998 work stoppage.

"We had a huge gap back then, and we have a huge gap now," Stern said during his annual state of the league session with reporters before Saturday night's All-Star events at the Staples Center. "But you work hard to close it. And I think we have the capacity to do it. Of course, we are smarter now than we were then. We've already had a lockout. We know what it feels like."

Although the players and owners insist they hope to avoid another lockout, they remain far apart on key negotiating points. Stern said each side rejected the other side's initial proposal during a two-hour meeting on Friday. At this point, the sides can't seem to agree on the league's financial statements from the past two seasons.

The NBA is pushing to implement a hard salary cap that could also include rollbacks on current contracts. During last year's All-Star Game in Texas, Stern estimated the league was on pace to absorb $400 million in losses during the 2009-10 season.

“

We both have the capacity to shut down the league. There's no magic that's going to keep this league operating if we don't make a deal.

”-- David Stern

At one point Saturday, Stern said the owners and players' union were in agreement on the extent of the league's financial losses. But pressed further to elaborate on what was characterized as a mutual understanding with union chief Billy Hunter, Stern clarified his earlier comments.

"I don't want to force Billy to disagree with me publicly," Stern said. "But I would say to you that there's no disagreement about the numbers. There's disagreement about certain components of the numbers that whether they should be included or not. The union's position was, 'Let's not argue about the numbers. Let's just go and negotiate about the outcome.'"

In the meantime, both sides are bracing for another lockout that could be worse than the last work stoppage. The owners shut out the players 12 years ago in a dispute that delayed the start of the 1998-99 season for 204 days. At issue then was the owners' insistence on establishing ceilings on individual player contracts.

The sides eventually worked out a new agreement that included a new contract scale for rookies and established veteran and mid-level salary exceptions for teams above the salary cap.

Play resumed that season with a 50-game schedule that started in January. Stern and Hunter got through that last dispute with significant battle scars. There could fresh wounds this time around.

"We haven't been able to learn enough, because we don't have a [new] deal," Stern said. "I think we have learned, and what the union has learned, is that we both have the capacity to shut down the league; that there's no magic that's going to keep this league operating if we don't make a deal."

Both sides agreed to continue meeting in smaller groups in the coming weeks amid skepticism over whether a deal could be worked out in time to avoid what would be the fourth work stoppage in league history. The current collective bargaining agreement expires June 30.

"At the end of the day, we agreed to get together and meet much more often and try to get an agreement before the end of the season," Hunter said Friday. "They indicated they're prepared to talk about everything, and we're prepared to talk about everything."

But the union is also prepared for the worst.

"I'm going to tell my guys to be prepared for a lockout," Hunter said.

Also:

• Stern said a franchise player designation isn't currently on the table, but is something that could come up for discussion.

• He is confident in the Hornets' future in New Orleans, but that the league wouldn't spend any more time helping the Kings build a new arena in Sacramento after spending several million dollars in the previous attempt that collapsed.

Michael Wallace covers the NBA for ESPN.com. The Associated Press contributed to this report.